According to Fox News, one of the largest restaurant franchisees in the United States is expected to file for bankruptcy. NPC International, which owns over 1,200 of Yum Brands (NYSE: YUM) Pizza Hut restaurants and nearly 400 per Wendy (NASDAQ: WEN), you can apply for protection for Chapter 11 today.
The affiliate has fought for years like Yum! Brands found that going around the pizza chain was a more intractable problem than initially believed. In the meantime, Wendy has fought to keep the pace of growth alongside McDonald is Restaurant Brands International̵
Failure already on the menu
NPC International broke financial alliances in its loan agreement last year and lost interest payments on nearly $ 800 million in loans in January. The franchisee, who has a debt of $ 1 billion, has begun to consider filing for bankruptcy as declining sales and rising labor costs have put pressure on restaurants across the country.
While the coronavirus pandemic led to several bankruptcy restaurant chains, including the children’s food and entertainment chain Chuck E. Cheese, the restrictions placed on restaurants to offer only takeaway and delivery were expected to help strengthen the chances of survival of NPC.
Where Yum! The brands have recognized that the franchisee’s problems would lead to “ripples” in the execution of the Pizza Hut segment this year, the chain has transformed over the past three years in an attempt to attract consumers, improving its menu and efficiency . More recently, it has moved its sit-down restaurants to smaller delivery and delivery locations. Wendy’s has also invested in its drive-thru technology.
Apparently this was not enough to overcome the serious impact of the COVID-19 pandemic, and although NPC’s private equity owner, Eldridge Industries, has promised the necessary support through its recovery, which may now be at an end.